Pay Agent Repeats Criticisms of Federal Pay-Setting Process
Senior Present administration officials, acting as the President’s Pay Agent, have repeatedly criticized the government’s process for setting federal employee raises based on comparisons with private sector jobs.
The Pay Agentâ€â€the heads of Labor, OMB, and OPMâ€â€said in its latest report that there is a need to consider major legislative reforms of the white-collar federal pay system since the enactment of a 1992 law.
That law created a formula of across-the-board raises plus locality pay designed to bring federal salaries within 5 percent of the private sector average by geographic area. But it said that the procedure must be amended since January 1994 because of budgetary and methodological concerns.
The Budget Issue
Closing the indicated pay gaps according to that formula would cost an additional $19.2 billion in the first year. However, it is also important to emphasize that the underlying methodology for locality pay of relying on one singular locality rate covering a locality pay area has lacked credibility since the beginning of locality pay in 1994 to such a degree that the statutory formula for closing pay gaps has been overridden either by Congress or by successive Presidents every year since that first year.
Ignoring that non-federal pay in a local labor market may differ between different occupational groups. As currently applied, locality payments in a local labor market may leave some mission-critical occupations significantly underpaid while overpaying others.
New Administration
In its first two years in office, the Biden White House has not recommended what would be a fundamental change to consider occupational and geographic differences in the raise-setting process.
Instead, it has followed the practice of its predecessors by urging agencies to use various pay-setting flexibilities and incentive payments for occupationsâ€â€such as IT and health careâ€â€where the government has the most trouble recruiting and retaining employees.
The next significant opportunity for the White House to recommend a major overhaul would be in the fiscal 2024 budget proposal to be sent to Congress in a few months.
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My name is Kevin Wirth and I have worked in the financial services industry for many years and I specialize in life insurance and retirement planning for individuals and small business owners, with a specialty in working with Federal Employees. I am also AHIP certified to work with individuals on their Medicare planning. You can contact me by e-mail or phone. I look forward to the opportunity of working with you on these most relevant areas of financial [email protected] 914-302-2300
